MEXICO Law and Practice Contributed by: Christian Lippert, Carlos Chávez, Juan Carlos Burgos and Édgar Martín, Galicia Abogados
sales made by foreign companies to customers located within the national territory. • Capital stock : For purposes of the third threshold (capital stock being concentrated), the CNA will look at the capital stock line item in the financial statements of the acquired Mexican entities. • Total assets / sales of the participants of a trans- action : The second prong of the third threshold captures (i) total assets in Mexico of buyer and seller (including the target), even if the same have no connection with the industry in which the target operates, and (ii) sales originating in Mexico (see ‘ Sales in Mexico ’ above) of buyer and seller. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds The second threshold focuses only on Mexican assets and sales of the entity whose shares are being acquired or that is selling assets. In the case of share deals this is quite straightforward, but in asset deals it is often warranted to run the Mexican assets and sales test both at the level of the entity that sells the relevant assets and at the level of the economic group to which it pertains. In the case of the third threshold, as it looks at total assets and sales of the participants of a transaction, the Mexican assets and sales test is run on a group- wide basis. 2.8 Foreign-to-Foreign Transactions Foreign-to-foreign transactions where no assets or subsidiaries in Mexico were involved were exempted from merger control until 2025. While the exemption no longer exists, a filing requirement would only be triggered to the extent that the target has assets, sales or capital stock in Mexico that exceed at least one of the aforementioned thresholds (or if the parties allo - cate a portion of the transaction value to Mexico and such value exceeds the first threshold). 2.9 Market Share Jurisdictional Threshold The FCA does not feature a market share threshold. 2.10 Joint Ventures As noted in 2.3 Types of Transactions , joint ventures are neither excluded from merger control nor subject
to special rules, and would generally trigger a filing requirement if the contributions of the parties to a common vehicle, the underlying assets acquired by a party to the joint venture (weighed by its interest in the joint venture) or the aggregate commitments of the parties to the joint venture, among others, exceed the monetary thresholds set forth above. 2.11 Power of Authorities to Investigate a Transaction The CNA can investigate transactions not reported to it even if they did not exceed jurisdictional thresholds. The statute of limitations to call-in below-the-radar transactions is three years after closing. 2.12 Requirement for Clearance Before Implementation Mexico is a suspensive jurisdiction, and accordingly, closing (as a matter of law or de facto) of a reportable transaction cannot occur until clearance from the CNA has been obtained. 2.13 Penalties for the Implementation of a Transaction Before Clearance As mentioned in 2.2 Failure to Notify , the CNA may impose fines of up to 8% of an undertaking’s taxable income in Mexico in the case of failure to secure clear - ance of a reportable transaction prior to its closing. The CNA has fined several economic agents that were parties to both domestic and cross-border transac - tions for, among other things: (i) closing an internation - al transaction with a carve-out of the Mexican portion which, in the view of the CNA, failed to adequately segregate the Mexican operation; (ii) executing the ini - tial steps of a series of transactions which were report - able as a whole, prior to securing CNA clearance; and (iii) granting to a financial investor the ability to control the business of the target through covenants. 2.14 Exceptions to Suspensive Effect There are no exceptions to the suspensive effect, and the CNA is not empowered under the FCA to provide a waiver of such effect.
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